NEW YORK, May 10 (Reuters) - Puerto Rico’s federally appointed oversight board on Thursday rejected the U.S. territory’s budget proposal for next fiscal year, saying it did not comply with a financial turnaround plan for the island approved by the board last month.

In a letter to Governor Ricardo Rossello, the board said the budget’s expense projections were inconsistent with the turnaround plan, which is designed to be a blueprint for how Puerto Rico will recover from the twin challenges of bankruptcy and September’s Hurricane Maria.

The board directed Rossello to submit a compliant budget by May 15, saying it needed “substantial revisions and additional information ... before it could approve the government’s proposed budget and submit it to the legislature.”

Puerto Rico has $120 billion in combined bond and pension debt it cannot pay, the biggest insolvency in U.S. government history. The board on April 19 approved a fiscal turnaround plan that included pension cuts and labor reforms, which Rossello has said he will refuse to implement.

The plan forecasts about $6.7 billion in debt payment ability for Puerto Rico through fiscal year 2023. But Rossello’s proposed budget does not allocate for debt service, while including other expenses that are not in the plan. Among them were $100 million in municipal spending and a reserve fund that is $130 million higher than the one in the plan, according to the board’s letter.

If Rossello refuses to implement parts of the plan, the board could sue for enforcement, putting yet another piece of the embattled island’s financial future in the hands of a judge.

The board took issue with earlier comments from Puerto Rican officials accusing it of failing to consult with the government on a timeline for budget development.

“From December 2017 to April 2018, the oversight board shared more than seven letters on the topic with various government officials” and “met in person dozens of times with” officials, the board claimed.

A government spokesman said Rossello’s administration planned to respond to the letter.